The federal government has cut a deal with Clive Palmer which it believes removes any more excuses to block the repeal of the carbon tax, the Coalition’s No. 1 election promise.

On the weekend, Mr Palmer and the government agreed to changes to his key demands for stiff penalties and price disclosure provisions to ensure they would apply only to energy sup­pliers, not all businesses.

Prime Minister Tony Abbott is prepared to recall parliament if a new deal to end the carbon tax does not pass the Senate this week.
Photo: Alex Ellinghausen

But concern from industry and other senators about a red tape nightmare for business prompted the negotiations to remove any ambiguity.

The government is cautiously ­optimistic but is prepared to recall ­Parliament next week should there be any more Senate hijinks. Environment Minister Greg Hunt said the public would be rightfully angry if any party blocked the repeal.

Business issued fresh warnings to the government to refuse Mr Palmer’s demands for a zero-price emissions trading scheme in return for his support for the Direct Action policy, its alternative to the ­carbon price.

“The absolute line in the sand and what we don’t want to see is the ­emissions trading scheme designed in some sort of political deal in the backrooms of the Senate. That would be a very serious problem,’’ Business Council of Australia chief executive Jennifer Westacott told Nine Network’s Financial Review Sunday program.

Related Quotes

Company Profile

“We want to see the tax gone this week and we want to see a proper process if there is any discussion about some kind of ETS. Green paper, white paper proper consultation, proper modelling, lets go back to some decent policy­making in this country,’’ she said.

The government’s immediate priority is to repeal the carbon price, Mr Hunt indicated on Sunday the government’s patience was wearing thin.

“Perhaps I am firming up my approach from diplomacy to sending a very clear message," he said.

“We all went to the election – all eight crossbench senators and the Coalition – with a pledge to appeal. The Australian people would be deeply disappointed, and I imagine angered, if that were not followed through this week."

After Thursday’s fiasco in which Mr Palmer ordered his three senators to defeat the carbon tax repeal at the last minute, the government had to start again. It has until the end of this week to pass the carbon tax repeal bills through both houses of Parliament.

If not, energy companies have warned it would be difficult to pass through savings, as the repeal will be backdated to July 1, while other industries warn of a compliance nightmare.

Mr Palmer’s conditions mandate than an energy supplier produce a statement detailing the impact of the carbon tax and the consequent savings. A company which fails to pass on savings faces a fine of 250 per cent of those savings. The government was deeply frustrated by Mr Palmer aborting the repeal on Thursday on the basis his amendments were deemed unconstitutional. He later refused to accept a small change of wording that would have solved the problem and allowed the vote to proceed. Instead, he chose to stick with the original wording and send the whole process back to the House of Representatives.

Mr Hunt said the government was determined to have the carbon tax repealed by the week’s end. He said both sides were happy with the word changes. “There have been some minor edits to ensure that any remaining questions about the scope and unintended consequences on small businesses are removed."

The Australian Industry Group, which warned of mayhem should Mr Palmer’s conditions apply beyond the energy sector, was satisfied, as were crossbench senators David Leyonhjelm and Bob Day who said they would vote against the amendments and the carbon tax repeal if it increased business red tape.

South Australian senator Nick Xenophon said he understood the original amendments to apply to all businesses but supported them regardless, believing any company which had its input costs increased by the carbon tax should be required to pass on the savings. “My reading of it was it was broader than power or gas,’’ he said.

Ms Westacott’s warning pertains to debate , also this week, on a bill which was to have abolished the Climate Change Authority. Mr Palmer has used his numbers to block that abolition and will amend the bill to call for the establishment of an zero cost ETS which would lay dormant until Australia’s major trading partners priced carbon. Mr Palmer has made his support for direct action contingent on his ETS being supported but the government has not plans to vote for the ETS and will defeat it in the lower house.